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From artificial intelligence (AI) and machine learning to autonomous vehicles, virtual reality, and cryptocurrency, the rapid evolution of technology shows no sign of slowing down. Companies in the digital technology sector are among the world’s most highly valued companies, with good reason. And businesses in every sector now use digital technology in all kinds of ways, from basic email to sophisticated data analytics.

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Fresh water is becoming a scarce resource in the United States and across the globe as demand continues to rise due to population and business growth. This emergent scarcity means businesses will face more consequences of the complex regulatory and legal frameworks governing water use and water quality.

Michael Best’s Water team understands those issues. We guide clients through the heavily regulated, politically sensitive environment surrounding the management of, investment in, and development of water resources.

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Publication

January 23, 2018Client Alert

EEOC Voluntariness Standards for Wellness Programs Vacated

Rules on wellness programs issued in May of 2016 by the Equal Employment Opportunity Commission (EEOC) under the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA) regarding voluntariness have been vacated effective January 1, 2019. Specifically, the vacatur invalidates the incentive limits used to determine whether an employer’s wellness plan is voluntary or coercive.

Background

Wellness programs involving medical exams or inquiries must be voluntary in order to comply with the ADA and GINA. In 2016, the EEOC issued regulations under the ADA and GINA that, among other rules, specify that a program will only be voluntary where the wellness incentive does not exceed 30 percent of the cost of self-only coverage for employees. Note, however, that this limit applies only where the wellness program solicits ADA- or GINA-protected information (separate rules apply under HIPAA). A complete discussion of the EEOC’s rules regarding employer-sponsored wellness programs can be found here.

The AARP challenged the EEOC regulations, arguing that the voluntariness standard was inconsistent with the ADA and GINA (AARP’s challenge was that 30 percent was too high). In August 2017, the District Court for the District of Columbia held that the regulations governing wellness program incentives are “arbitrary and capricious,” and remanded the regulations back to the EEOC for reconsideration. In its decision, the Court stated that the EEOC did not provide a reasonable explanation as to why the incentive limit rendered an employee wellness program voluntary rather than involuntary.

In a status report to the District Court in September, the EEOC announced that it intended to issue a notice of proposed rulemaking by August 2018, issue a final rule by October 2019, and that the new final rule would likely not take effect until at least 2021. Subsequently, upon the AARP’s request, the Court agreed to reconsider its original decision. In a new opinion issued in December 2017, the Court agreed to vacate the EEOC’s final regulations regarding voluntariness, citing the Court’s view that a 2021 applicability date for new rules would not be sufficiently timely. The Court further recognized that a vacatur is the usual solution when an agency fails to provide reasoned explanations for its regulations. Nevertheless, the vacatur was stayed until January 1, 2019.

Impact on Employer Wellness Programs

As a result, for 2018 employer-sponsored wellness programs, there is no change. Such programs must comply with the 2016 EEOC regulations.

However, for employer-sponsored wellness programs provided after December 31, 2018, absent new guidance or regulations from the EEOC (which based upon EEOC statements appear unlikely until late in 2019), employers can rely on the voluntary standards set forth under the HIPAA regulations. Nevertheless, the EEOC’s other ADA and GINA wellness regulations still apply. Because of the shifting landscape, employers will want to carefully vet their wellness programs in their benefit planning for 2019.

Related People

Julia provides clients with guidance on a variety of labor and employment matters. Her experience includes work related with employee benefits, transgender rights, and FLSA overtime regulations. She also assists with navigating FMLA, ADA, and HIPAA matters.

Kirk’s practice focuses on legal issues related to all aspects of the employment cycle, from hiring through termination and severance. Substantially experienced in both benefits and employment law, Kirk is well positioned to help clients respond to the opportunities, vulnerabilities and benefit ramifications of particular employment decisions. Kirk’s focus includes developing and maintaining effective compliance strategies related to defined benefit plans, defined contribution plans, executive compensation and more.

A persuasive advocate, Charlie vigorously defends employers and benefit plans in courts and other forums. He excels at assessing and fixing problems that arise with employee benefit programs and providing a strategically driven approach to benefits compliance and risk management planning.

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